John Whittingdale, chairman of the culture, media and sport select committee,
has backed calls for the video games industry to get tax breaks in the March
Budget.

Writing in a foreword to a new report by TIGA, the trade association representing the UK games industry, Mr Whittingdale said that “The opportunity for Britain is clear. If the right support from Government is forthcoming, the UK game development sector can take advantage of projected growth, consequently contributing to the rebalancing of the UK economy.”

He said that “The global games industry has grown by 23 per cent through the global financial turmoil, and is projected to grow by over 8 per cent each year to 2015.”

The report was submitted in evidence to HM Treasury and to the Department of Culture, Media and Sport as part of TIGA’s campaign to secure tax breaks for an industry it says is under threat from friendlier fiscal policies abroad.

TIGA argues that “The proposed Games Tax Relief would create over 4,660 highly skilled jobs and trigger millions of pounds in investment in the UK video games industry”. It wants a new Games Tax Relief to operate in the same way as the existing Film Tax Relief, and claims that Game developers in countries including Canada, France, Singapore and the USA already receive tax breaks for games production. TIGA figures suggest that “employment in the UK games development sector has declined by over 10 per cent since 2008, while the Canadian games industry’s workforce grew by 33 per cent between 2008 and 2010”.

Although the global games industry is expanding and Britain remains the largest centre in Europe, TIGA claims that the UK share of it is declining.

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Offering a tax relief to video games, however, would impose cultural criteria because of EU rules. TIGA claims 44 per cent of UK-made video games profiled in an exercise for its report would meet the cultural test. It claims that at a cost of £96 million to the Treasury over five years, tax relief could generate £172 million in new and protected tax receipts, and nearly £300 million for the wider economy.